Ford’s $30 Billion Investment in EVs
A Historic Opportunity for Growth
Ford (F) is increasing its investments in electric vehicles, vowing to spend more than $30 billion on EVs through the end of 2025. The vehicle maker said that it expects close to half of its global sales to come from electric vehicles by 2030,. The focus on EVs is part of the company’s Ford+ turnaround initiative. Through this arm of its business, Ford wants to improve operations and expand into new markets including connected cars, subscription services, and EVs.
“This is our biggest opportunity for growth and value creation since Henry Ford started to scale the Model T, and we’re grabbing it with both hands,” Ford’s new CEO Jim Farley said about EVs during his first investor day since becoming Ford’s CEO in October.
All EVs by 2035
Ford said previously that it would spend $22 billion on EVs through 2025. With the increased investment, the company has set a goal of selling only EVs by 2035. Ford thinks that advances in vehicle connectivity and electric car batteries will enable EVs to be more profitable over time than gasoline-powered vehicles.
Ford said it plans to turn most of its car brands into electric vehicles, and that a new EV platform will be used for versions of the Explorer SUV, the Lincoln Aviator, and future rugged SUVs. This announcement prompted speculation that Ford could launch an electric version of its soon-to-be-released Bronco SUV.
Ford Wants to Boost Profit Margins
Through Ford’s turnaround, the company is aiming to increase its adjusted profit margin to 8% before interest and taxes during 2023. That was a goal of former CEO Mark Fields but he was never able to reach it. Prior to the pandemic, in 2019, Ford’s adjusted profit margin stood at 4.1%. Last year it was 2.2%. Ford did get a boost in the first quarter of 2021 because of supply and demand imbalances for new vehicles, pushing its adjusted profit margin to 13.3%.
Ford is trying to run a leaner operation and is making big bets about the future of automobiles. It will be interesting to watch the EV market evolve and to see whether Ford’s strategies pay off.
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